The European Central Bank took steps to protect Portugal's banking system after Moody's Investors Service cut the country's debt to junk status, The Wall Street Journal reported. The ECB said it would indefinitely suspend existing rules that require at least one investment-grade rating by a major rating agency in order to accept government bonds as collateral for ECB loans. Although Portugal still meets those requirements even after the Moody's downgrade, the suspension removes any uncertainty even if other agencies follow suit in coming weeks.

European governments' plan for private-sector creditors to help Greece's next bailout without triggering a default were thrown into doubt Wednesday, as senior German officials resurrected a once-rejected proposal that would cost investors more, The Wall Street Journal reported. The German proposal—calling for investors to be encouraged to swap Greek government bonds for new bonds—had been ditched a month ago after strong opposition from the European Central Bank and governments including France, because it would lead to Greece being called in default by rating agencies.

Europe's hopes for a significant contribution by private bondholders to a new bailout for Greece are fading, as it becomes clear that banks have sold off a substantial proportion of their Greek government-bond holdings despite pledges by some of the institutions not to do so, The Wall Street Journal reported. Greece has about €64 billion ($93 billion) of benchmark bonds coming due in the next three years, among other liabilities, and euro-zone leaders had hoped that private lenders would voluntarily take on longer maturities in order to improve the country's battered finances.

The Basel Committee for Banking Supervision (BCBS) warned on Wednesday that the failure of many countries to implement workable resolution regimes, could hinder banks from being allowed to fail, Reuters reported. The report also said that as well as gaps in national resolution toolkits, there were still many shortcomings with respect to the resolution of a financial group in a cross-border context.

Ireland's credit rating may be cut to junk by Moody's Investors Service after Portugal yesterday lost its investment grade rating, analysts said Wednesday, the Irish Times reported. Moody's, which slashed Portugal four notches yesterday to Ba2 from Baa1, in April lowered Ireland's credit rating to the lowest investment grade Baa3 and left country's outlook on negative. The ratings company cut Portugal's rating in part because the nation may not be able to return to debt markets in the second half of 2013.

Struggling retailer Homeform, owner of Moben Kitchens and Dolphin Bathrooms, appointed Deloitte as administrators on Wednesday and sold its Sharps Bedroom business, Reuters reported. Homeform, which has over 160 showrooms in the UK and 1,208 staff, said last month it was looking to appoint administrators after trading in its kitchen and bathroom units was hit by cash-strapped customers curbing spending during tough economic times. Deloitte, a business advisory firm, said Moben, Dolphin and another of Homeform's businesses, Kitchens Direct, had been closed down and were up for sale.

Bidders for over 600 Lloyds Banking Group branches have less than a week to pitch for a deal that could incur costs of 1 billion pounds ($1.6 billion) for the part-nationalised British bank, Reuters reported. The costs of transferring and implementing the branches are likely to be far higher for Lloyds if it sells the branches to a start-up bank, which potentially gives an edge to established rivals who have infrastructure in place. Lloyds has been told to sell 632 branches by European regulators as the price of being bailed out by the taxpayer.

Sweden's National Debt Office Tuesday said it has given its all-clear to Saab Automobile's request to sell 50.1% of Saab Automobile Property AB, with the final decision on the matter now resting with the government, Dow Jones Daily Bankruptcy Review reported. The NDO considers the Swedish government to have enough collateral to cover the guarantees for Saab Automobile's state-backed loans in the European Investment Bank, even without the shares in Saab Automobile Property.

International banks and insurers will meet on Wednesday to thrash out a plan for the private sector to contribute to Greece's bailout effort as fears grow that the proposal will be derailed, Reuters reported. The Institute of International Finance (IIF) lobby group said it will chair the meeting of private-sector creditors. It needs to resolve how a deal can get past credit rating agencies without it being termed a default, and how accountants will deal with it. A lot of work remains to be done and Wednesday's meeting will not be decisive, several sources said.

Portugal’s credit rating was cut to below investment grade by Moody’s Investors Service on concern the country will need to follow Greece in seeking a second bailout. The euro dropped for the first time in seven days, Bloomberg reported. The long-term government bond ratings were lowered to Ba2, or junk, from Baa1, and the outlook is negative. Discussions to involve private investors in a new rescue plan for Greece make it more likely that the European Union will require the same pre-conditions in the case of Portugal, Moody’s said in a statement.